Saturday, June 12, 2021
Aah! Finally it’s Saturday after a crazy, crazy week!
Highlight of the week was El Salvador making Bitcoin as a legal tender with a whooping majority of 64 out of the 84 possible votes. On the day of voting, President Nayib Bukele joined a Twitter Space with 22K+ people hosted by Nic Carter. It was the first time, a leader bypassed the traditional media and chose to directly interact with people on real key issues. He answered several questions related to making bitcoin as a legal tender, the governments plan on bitcoin mining, about permanent residency to people, which wallets will the government allow etc etc. Why are the countries moving towards the adoption of Bitcoin? What makes Bitcoin really special? Le't’s try decrypting it from the first principles. But what are first principles?
A first principle is a foundational proposition or assumption that stands alone. We cannot deduce first principles from any other proposition or assumption. It’s basically thinking without any bias or any analogies. Elon Musk applied first principle thinking and reduced the cost of rockets by more than 10x. He basically reinvented the entire field of space exploration with first principles.
A first principle is a basic assumption that cannot be deduced any further. Over two thousand years ago, Aristotle defined a first principle as “the first basis from which a thing is known.”
First principles thinking is a fancy way of saying “think like a scientist.” Scientists don’t assume anything. They start with questions like, What are we absolutely sure is true? What has been proven?
In theory, first principles thinking requires you to dig deeper and deeper until you are left with only the foundational truths of a situation. Rene Descartes, the French philosopher and scientist, embraced this approach with a method now called Cartesian Doubt in which he would “systematically doubt everything he could possibly doubt until he was left with what he saw as purely indubitable truths.”
“I don’t know what’s the matter with people: they don’t learn by understanding; they learn by some other way—by rote or something. Their knowledge is so fragile!”
~ Richard Feynman
What are the first principles used in Bitcoin? We all know Bitcoin is scarce. It’s not like any other centralized, controlled currency which is printed by a central bank. Scarcity increases value. Organic vegetables are costlier than Normal vegetables. A vehicle number plate reading 0001 is costlier than other normal number plates. NFTs have a value because they are unique, scarce. You make anything scarce and it will have a value. If I have a pen that is unique and you have a pen that is sold in every stationary shop across the street, you can guess which will be worth more. Scarcity increases value is one of the first principles used in Bitcoin. This is what makes Bitcoin an alternative to the current centralized currency. First principles are what gives Bitcoin its value.
“Science is a way of thinking much more than it is a body of knowledge.”
~ Carl Sagan
See you next Saturday, until then have a great weekend :)
Cheers!
Some things that you may find interesting-
Article: Social Media isn’t the problem…. We are by Mark Manson
Movie of the week: Moneyball (Let me know the first principles you get from this movie)
Song I am listening to: The Show by Lenka
Quote I am enjoying: “To understand is to know what to do.”
Thread of the week: Happiest Country in the World for 4th consecutive time
Here are the last three posts if you were too occupied to read them:
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